Ann: Updated Nugent Mineral Resources Estimate, page-27

Hi Veritas,



All of us of course want to make as much money as possible from our investment in HGO. If it was remotely possible to "take one small step backwards for now for two large steps forward ultimately." I'm sure everyone would agree.

I unfortunately can't see how that's possible but always willing to learn.

I'm seeing any delay as a giant step backwards, where existing shareholders loose a big share of the $300m worth of hidden gems, that the market is placing no value on, for precious little gain. If the restart is delayed existing shareholders can then look forward to a future of constantly being diluted out of the value in the hidden gems and the future cash flows.

It's worth repeating that if we delay we continue to tip circa $1,000,000 a month on essential overheads corporate costs and care and maintenance down the drain. That is the cost of doing nothing.

$1m is enough to pay to pay 40% PA on $30m of debt. Debt starts at nothing builds up and is paid back so the average exposure to interest is 50% of the loan amount. The stand still overheads are equivalent to 80% pa on the average debt. Interest from a high risk low covenant lender would not be anything like that.

Once in production even if we were paying through the nose for interest we need less than $10m pa of free cash flow from operations to pay the interest and corporate cost to preserve existing shareholders share of the future cash flows.

We easily do that by increasing the cut off grade and processing a small amount of high grade ore while waiting for the price to come back.

Processing 800 Kt. pa. at 1.8% cu equivalent would do the trick according to my spread sheet at a copper price of us $2.20/lb

At todays prices of $3.48 we would be generating <$60m pa of free cash flow and have the debt paid off in a few months.

The early resource estimates were indicating those sort of grades before the cu price jumped and everyone got excited about lowering the grade and increasing plant throughput.





P.S.

If an investment decision had been made in Feb as per plan A we wouldn't be having this discussion and would all own a big slice more of the future cash flows.

Cheers

V